Monday 20th Nov 2017 - Logistics Manager

Resilience is the key

All across Europe, banks are writing off billions of euros as the credit crunch takes its toll. Deutsche Bank’s last figures show that pre-tax profit for the quarter April-June at 642m euros was down from 2.7 billion euros the year before.

And, while oil company Shell has just reported profits up 4.6 per cent to £4bn for the quarter, British Airways has revealed that its operating profit fell to £35m for the period – from £266m last year. That was mainly a result of a 51.2 per cent increase in the fuel bill.

But just how tough things are has been highlighted in the UK by the latest Purchasing Managers’ Index from the Chartered Institute of Purchasing and Supply and Markit Economics. This shows that levels of output in manufacturing have been falling at rates unseen since late 1998. Demand has been falling in both domestic and export markets despite the fact that sterling has fallen against the euro in recent months.

Rob Dobson, senior economist at Markit, says: “A corrosive mix of falling demand and record cost inflation penetrated almost all areas of the UK manufacturing sector in July.”

Rising costs are in part being passed on to customers in the form of increased transport and distribution charges, the report says.

So it is perhaps surprising to find a business that you would expect to be vulnerable to rising oil prices, Deutsche Post World Net, reporting 12 per cent growth in its underlying EBIT for the first half.

Chief executive Frank Appel was able to say: “Our healthy operating performance in the first half demonstrates that a well-balanced portfolio like ours and a global presence can show more resilience to an unfavourable economic environment.”

The group still expects underlying EBIT to reach 4.1 billion euros – “assuming that the economic environment won’t worsen significantly”.

And while British Airways struggled with the cost of fuel, its cargo division turned in a remarkable performance with an increase in the volume of cargo carried of 4.1 per cent, against cargo capacity that was down three per cent. Overall yield increased by 17.3 per cent.

Clearly there are opportunities for companies involved in the supply chain to flourish despite the tough conditions. Hopefully, we will see that kind resilience right across the business.